It’s Time for the Nuclear Option
America’s
national debt reached $16,000,000,000,000 about three months ago. That milestone just happened to
coincide with the opening day of the Democratic National Convention. We have added another $300,000,000,000 plus
since the balloons were released in Charlotte. We are approaching the point at which our debt as a
percentage of GDP might take us down.
We are in a fiscal death spiral.
It is impossible to know exactly when economic Armageddon is
coming. But make no mistake about it;
if we continue to spend at our current rate, it is coming.
Against
this backdrop, Democrats and Republicans are pretending to deal with the
pretend crisis that we pretend to be a “fiscal cliff.” I say it is a pretend crisis because it
pales in comparison to the real crisis that consists of serial trillion dollar
deficits, ballooning national debt, and uncontrolled spending. President Obama and Congressional
Democrats continue to make the ridiculous argument that “taxing the rich” is
the be-all-end-all path to fiscal responsibility and economic prosperity. Best estimates are that the Obama tax
plan would generate about $82 billion annually to help us address our $1.1
trillion deficit problem. To put
it in dollar terms we relate to, it is the equivalent of adding a part time job
that pays $8,200 per year in a household that spends $110,000 more each year
that it takes in! Not exactly a
fix. Let’s face it; taxing the
rich is about envy and wealth redistribution. No serious person believes this is the solution to our
deficit and debt problems.
Republicans
are behaving only slightly better.
Speaker of the House John Boehner (R-OH) and Senate Minority Leader
Mitch McConnell (R-KY) have a history of talking tough on spending reductions,
but when it comes to performance, not so much. The 2011 debt ceiling “negotiation” ended with an increased
debt ceiling and some reductions in the
rate of growth in spending.
However, once the ink dried on the agreement, almost all of these “cuts”
proved illusory.
During
the current negotiation process, Boehner and McConnell have held to their promise not to raise tax rates,
but have intimated a willingness to eliminate certain tax deductions and
credits. This would allow
Republicans to compromise with Democrats by raising revenue, but still hold the
line on marginal tax rates, thereby remaining on Grover Norquist’s cocktail
party invitation list. But the
Republicans have not put forward a serious entitlement reform proposal or
stated specific spending cuts they would recommend. They have not articulated the big picture well enough to
help people comprehend the magnitude of the debt monster we face.
It
is obvious to me that working through the usual institutional channels will not
result in a reasonable resolution of our fiscal crisis. In the absence of radical action, America
is going down economically.
But
the Republican controlled house does have one trump card: the debt ceiling. Congress sets a debt ceiling, above
which the federal government is not allowed to borrow. We are on the precipice of hitting the
current debt ceiling of $16,400,000,000,000. What should the Republican House do? Stop the madness. Cut it off. Don’t raise the debt ceiling. Force lawmakers, the executive branch and the bureaucrats to
stop deficit spending. Just like
that. Make the addict go cold
turkey, and hope withdrawal doesn’t kill him.
Yes
I know, this is intemperate and will cause all kinds of anxiety and unintended
consequences. I am generally not a
radical reactionary. I believe in
institutions and decorum and compromise and all that stuff. After all, I voted for the bloated
budget passed by the Minnesota Legislature during the 2011 legislative special session
because it was the only viable option, given our Governor’s intransigence. It is not my nature to upset systems
that have been in place for decades or centuries. However, I don’t see any viable path to fiscal sanity so
long as Congress and the President have the authority to borrow money. Words cannot adequately describe the
degree to which Washington lawmakers, both Democrat and Republican, have
engaged in dereliction of duty on the issue of spending.
It
is clear to me we have very few statesmen in Congress, weak leadership in both legislative
bodies, and a President who either doesn’t know or doesn’t care that he is
the captain of a ship headed for an iceberg. I know the medication I prescribe comes with horrible side
effects. But it appears to me it
is the only chance the patient has to survive.
